Rulon D. Pope addresses Engel’s Law in BYU Forum

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Rulon D. Pope, a professor in the Department of Economics, spoke at Tuesday’s forum and delivered the 2012 Karl G. Maser Distinguished Faculty Lecture addressing Engel’s Law.

Pope demonstrated quality research, teaching and University citizenship and was selected as the recipient of the award, and was provided the opportunity to speak at the campus forum.

After graduating from BYU in economics, Pope went to graduate school at Berkeley and studied agricultural and resources economics. He developed an interest in poverty and malnutrition reduction and strived to enhance food security for  the world.[media-credit name=”Chris Bunker” align=”alignright” width=”300″][/media-credit]

“As followers of Christ, we all wish for  the well-being of the world’s poor,” Pope said. “Developed economies also have their own version of food insecurity and programs to ameliorate suffering and malnutrition.”

Pope discussed the cause of food insecurity has previously been presented as a production problem, both through a detailed explanation he corrected the misconception and defined the food insecurity source developing from lack of adequate food distribution and economic growth.

Pope focused on how the demand of food production and combustion relate to Engel’s Law.

“The poorer a family is, the greater is the proportion of the total out which must be used for food,” Pope said. “The proportion of the outgo used for food, other things being equal, is the best measure of the material standard of living of a population.”

The law observes the lower the income of a family, the higher percentage of income will be spent on food.

Depending on the demand of a good, goods are titled “normal” or “inferior.”

“Ramen noodles may be a normal good for a missionary, he or she would buy more, hang a little more income,” Pope said. “But post-mission, after selling pest control or security services, Ramen noodles would likely be an inferior good.”

Pope concluded by listing five implications of Engel’s law.

First, the law denotes food budgets predict the well-being of a person or country and through economic growth solutions can be found to increase caloric deficits. Second, “the agricultural sector falls as a percent of economic activity as a country grows because income shares going to food gall with growth.” Third, an active agricultural sector is more important because it will help fund the economy and play a role in developing manufacturing. Fourth, the rise in agricultural products will reduce incomes more for the poor than for the wealthy individuals. Fifth, a 19th century lawyer Eugene Slutsky predicted “goods with larger budget share and larger responses to higher incomes will tend to be more price responsive.”

Engel’s Law ultimately implies the behavior of the poor will be more sensitive to price changes of food than the behavior of the wealthy.

“It is clear Engel was really onto something very important for an understanding of our changing world,” Pope said.

 

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